Authorities asked to resolve legal issues to start treasury bond trading on capital market

The authorities concerned have been asked to resolve all legal issues within one week in order to start the trade of treasury bonds on the capital market through beneficiary owner (BO) accounts.

The directive was given on Sunday to the Dhaka and Chattogram stock exchanges, Central Depository Bangladesh Limited (CDBL), and the Bangladesh Bank at a meeting held in the boardroom of the Dhaka Stock Exchange (DSE).

The development came against the backdrop of a tripartite move taken earlier by the Bangladesh Bank, the securities regulator and the DSE to invigorate the secondary debt market.

The Sunday's meeting was chaired by Shaikh Shamsuddin Ahmed, commissioner of Bangladesh Securities and Exchange Commission (BSEC).

At the meeting, the finance division was directed to take the necessary steps to resolve all legal complexities for an immediate beginning of transactions of government securities, including treasury bonds.

After the meeting, Shamsuddin Ahmed said there was an open discussion on the issue.

He said everyone at the meeting emphasised the importance of increasing liquidity in the secondary market by introducing bonds.

Government securities are issued to borrow from the financial market to meet the fiscal deficit. They are considered safe investments as investors are guaranteed return of both interest and principal. This is done usually in the form of bonds, but it may also include notes, bills and so on. In Bangladesh, government securities comprise treasury bonds and bills.

Presently, only the listed corporate bonds can be traded through the bourses as the data of such debt instruments are preserved by the CDBL.

Meanwhile, the trade of government treasury bonds is not possible through stock exchanges as the central bank is the only depository operator of this debt instrument.

Earlier, the finance ministry issued an instruction over the introduction of the trading of treasury bonds through stock exchanges.

The DSE also took several initiatives to conduct trading of listed treasury bonds through its platform. Presently, 221 treasury bonds are listed with the premier bourse.

But the trading of treasury bonds has remained suspended for long due to complexities over depository operations.

The market capitalisation of treasury bonds listed on the stock exchange is around Tk60,000 crore, accounting for around 17% of the DSE's total market cap. The number of corporate bonds listed with the premier bourse is just two.